Intel’s profit down 27% as PC market falters

Need more proof that the PC market is in trouble? Bellwether Intel has posted some rather lackluster results, disappointing investors, but still managing to beat analyst forecasts.

In Q4 Intel saw its profit fall 27 percent, while revenues fell 3 percent, from $13.5 billion, down from $13.9 billion. The weak PC market is to blame for the weak results and analysts estimate PC shipments declined 3.5 percent in 2012.

Intel is not out of the woods yet. It estimates its first-quarter revenue at $12.7 billion, plus or minus $500 million. Analysts expected $12.9 billion. What’s more, Intel plans to increase capital spending to $13 billion, exceeding analyst expectations by $3 billion. Analysts are now expressing fears that high capital expenditures could increase Intel’s fixed costs and drive down margins.

Intel is hoping that pouring more money into manufacturing, namely into 450mm development, will give the company a significant cost advantage in the long run. However, 450mm plants are still years away. In the meantime Intel will have to work out what it wants to do in the mobile market. It is still struggling to gain a foothold in the mobile market, dominated by ARM chips from the likes of Qualcomm, Samsung, Apple and Nvidia.